Supply-Chain Management

The supply-chain includes feedstock procurement, inbound logistics, inventory of all material/products, outbound logistics, etc. Through inventory, the supply-chain has a major impact on working capital in a business.

Companies often do not focus enough on supply-chain management. For example, in the chemical industry, we know of companies that would hire hundreds of researchers and spend tens of millions of dollars each year on searching for next new catalyst or new process that could lower their production costs by 10%. However, their logistics costs would be at least 10% of revenue and they would not devote anywhere near the same amount of resources on lowering their logistics costs. The same is the case in several other industries.

Supply-chain management can benefit a lot from innovative, out-of-the-box thinking. We advise clients on how to focus appropriately on optimizing the supply-chain; how to use creative thinking to develop and implement novel, cost-saving ideas.

Over the years, we have come across multi billion dollar corporations that do not optimize their inventory, or, for that matter, their overall working capital. In addition to the expertise and the attention that needs to be devoted to supply-chain management, the business culture needs to change to attach due importance to it.

Another folly we encounter is excessive benchmarking by some companies in order to optimize their supply chain. Benchmarking to a certain extent is useful but carried to an extreme, it prevents businesses from being the best that they can be.

A few years ago, we helped a US based company reduce its working capital by over $200 million. A large part of that was proper inventory management. Actually reducing the working capital was the easy part of the work. The more challenging part was to establish the right culture in order to sustain the benefit of what we accomplished. That is where our industry expertise and business leadership experience came in handy. We have the credibility to establish processes and culture and make people at our client companies carry on the journey.